Goldman Sachs agreed to an approximately $100 million settlement in a case filed against the brokerage by the liquidators of General American Life Insurance.
The settlement was approved Thursday by Cole County Circuit Court Judge Patricia Joyce. The settlement, reached after two days of mediation, is the largest so far for cases over the 1999 collapse of the insurance company. The case was set for trial in February 2009.
"It was court-mandated mediation and it got resolved," said Paul Kovacs, an attorney with Armstrong Teasdale who represented special deputy liquidator Albert Riederer and the Missouri Department of Insurance.
As a matter of policy Goldman Sachs doesn't comment on litigation or regulatory matters, said spokesman Michael DuVally.
Riederer and the department had sought $3 billion in punitive damages from Goldman Sachs over the investment bank’s actions as a potential creditor and an adviser to insurer General American on its sale to Metropolitan Life Insurance Co.
The lawsuit said Goldman Sachs failed to provide promised credit of up to $2 billion when General American suffered a liquidity crisis; undervalued General American by up to $700 million when the investment bank said MetLife's offer of $1.2 billion for the insurance company’s assets was fair; and failed to disclose that MetLife was a Goldman Sachs client before the investment bank gave its opinion on the sale.
The lawsuit was filed against General American directors and advisers, including accounting firm KPMG, after General
American collapsed when investors sought to redeem $6.5 billion worth of a highvalue investment product within a week. The other defendants settled earlier, with investment bank Morgan Stanley Cos. Inc. paying the most, $95 million, under a 2006 agreement. Goldman Sachs was added to the lawsuit in 2007.
In addition to Armstrong Teasdale, Kansas City firm Shaffer Lombardo Shurin represented General American liquidators. Goldman Sachs was represented by Sullivan & Cromwell, with Thompson Coburn as local counsel.
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